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Analysis

Italian trend output growth

by Gabriel Stein

Mon 11 Aug 2014

Italian trend output growth Enlarge Chart loading Image

What the chart shows: The chart shows trend real output growth, that is to say, the medium-term sustainable GDP growth rate, for Italy.

Why the chart is important: Early August saw the news that Italy has once again entered recession. This was the 11th quarter of contracting GDP of the last twelve; and the third recession since 2007. In real terms, Italian GDP has not grown since Q2 2000; in nominal terms, it is smaller than in Q1 2000. This casts a bleak light over the problems facing the Italian economy.

With a trend growth rate currently below zero, a recession in Italy is not something special or unusual; rather, it is part of the normal state for the economy. Prime Minister Renzi claims that his reforms will reverse Italy’s decline. However, so far he has concentrated on political, rather than structural economic reforms. This means that we are likely to see further quarters when the Italian economy is shrinking.

Chart and comments provided by Oxford Economics www.oxfordeconomics.com